Impact Fee Programs and Land Secured Financing Districts 2007 National Impact Fee Roundtable Portland, OR Presented by EPS, Sacramento County, & River Rock Development Company

Introduction/Overview  Objective = Describe issues, policies, and mechanics surrounding the overlap of impact fee programs and land secured financing mechanisms.  Participant Introductions and Roles  Order of the Discussion/Presentation Describe Baseline Assumptions for Discussion Sacramento County Experience A Developer’s Perspective Lessons Learned

Baseline Assumptions  $30.0 Million Freeway Interchange  Fee Program Funding for Interchange  Two developers – Dev. A and Dev. B  Public Agency has experience with fee credits and land secured financing  Proceeds from Land Secured Financing District will fund Impact Fee-funded Interchange

Scenario A Fee program funds interchange construction with cash payments. Scenario B Developer A advance funds the $30m interchange and is reimbursed through fee credits & cash reimbursement from the fee program.

Scenario C Developer A advance funds the $30 million Interchange and is reimbursed through a land secured financing district.

Sacramento County Story Case Study as an Example of the Issue

Request for Consideration  Developers from two projects made request  Initial reaction – No!  Fundamental Question “Should Public Agencies allow for facilities to be funded by both programs?”

Background  County Board is pro-development  Late 90’s changing environment with Annexations and Incorporations  County’s experience with CFDs mostly with single owner large developments  County’s experience with fee programs mostly large areas with many owners  Evolution of Specific Plans

Convened team of interested and experienced parties  County Infrastructure Finance Section  County Counsel  Developer  Developer’s Attorney  County’s Financial Consultant (Special Tax and Impact Fee Program Expertise)  Developer’s Financial Consultant (Special Tax and Impact Fee Program Expertise)

Issues Addressed  Should Fee Program Credits be allowed for facilities that are advanced funded with CFD proceeds?  Should Future Reimbursements from Fee Programs be allowed for facilities advanced funded by a CFD?  Economic Impact of taxes and fees on development projects – Does a development fee or special tax affect the value of a property? Does this depend on circumstances such as amount of tax and the economy? To what extent is there a deduct on the value of a property for the present value of a tax stream or the amount of an impact fee?

Issues Addressed (continued)  Public Policy Issues Why would you want to do this? Provides Assistance to Developers Supports Aggressive Conditioning Supports the Specific Planning Approach Leads to facilities in the ground earlier Policies should be clear to developers and the public

Implementation Example  (I) CFD Acquisition Agreement – Provides for the acquisition of facilities constructed by developers  (II) Fee Program Credit Agreement for Advanced Funding of the Facilities - Authorizes credits against fees for participation in CFD that advanced funded facilities  (III) Fee Program Reimbursement Agreement - Agreement authorizes reimbursement for amount over and above the amount credited under Agreement II

County’s Conclusions  Important to Address up front so everyone understands the policies and rules  Good to have staff involved in the administration of both programs  Flexibility to Developer  Still encourage not to include in both programs. CFDs should first be used for facilities not funded by fee program  Important to have a clear system where specific agreements authorize the credits and reimbursements and that the credits/reimbursements be tracked and tied back to the agreements  Future reimbursements should go to the CFD if advanced funded by the CFD

Scenario C – County Implementation Developer A advance funds the $30 million Interchange and is reimbursed through a land secured financing district and fee program reimbursements.

A Developer’s Perspective Additional Views on the Issues

Developer Cash Flows for Interchange Cost Developer B $15mPay Interchange fees at Building Permit. Developer A $30mCFD Special Tax Lien $30m Pay Contractor to build interchange $30mCFD Bond Proceeds Reimbursement $15mReimbursement from Interchange Fee Program from Developer B fees. $15m Net amount paid for Interchange

Cash Flow Analysis

Lessons Learned  County perspective  Developer’s perspective  Recommendations for Further Research Market effect of special tax lien on property valuation Review of other jurisdiction’s policies (uniformity ?)